Ó An Roinn Caiteachais Phoiblí, Seachadta ar an bPlean Forbartha Náisiúnta, agus Athchóirithe
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The Minister for Public Expenditure, NDP Delivery and Reform Paschal Donohoe today (12 January) welcomes the ESRI’s publication of its report ‘ The National Development Plan in 2023: priorities and capacity.
Commenting on the publication of the report by the ESRI, Minister Donohoe noted:
“I welcome this comprehensive review of the constraints and capacity of key sectors to deliver upon the key objectives of the National Development Plan (NDP).
"In early 2023, I presented to Government a package of significant actions aimed at enhancing delivery of the NDP. Among these actions, I committed to an independent evaluation of investment priorities and capacity of the NDP, focusing on the capacity to deliver current government priorities, to utilise sectoral capital allocations and to estimate the impact of the NDP on key economic indicators.
"I want to thank Alan Barrett, John Curtis and colleagues in the ESRI for researching and drafting this report which will inform an evaluation of sectoral capital allocations under the NDP. The report sets out the competing demands for capital expenditure across various sectors and highlights the risks posed by capital expenditure plans exceeding the capacity of our economy to deliver projects in a supply constrained and full employment economic environment.”
The report provides useful insights on constraints and capacity of key sectors including housing, energy, transport, health and education. In addition, it details cross-cutting themes which impact on the priorities for the NDP that cut across sectors, including climate commitments, planning, and balanced regional development. Constraints in the construction sector are also examined by the ESRI, as well as inflationary pressures.
The ESRI points to risks associated with further increasing capital spending which could have the unintended consequence of fuelling further inflationary pressures. This centres on the capacity of the economy to absorb and respond to further capital expenditure when it is already running at peak capacity in a tight labour market. Nonetheless, the ESRI advises that there is justifiable demand in certain sectors, particularly housing and health, due to demographic growth and ageing. However, demands for further expenditure will be considered within the overall macroeconomic context for the State and its ability to meet these demands given the capacity constraints identified in the report.
In terms of next steps, Minister Donohoe comments:
“The ESRI report provides insights and recommendations on the NDP which I will consider in the context of updating NDP ceilings across various sectors over the medium-term. Departments will be engaging with my officials in the coming months to ensure that capital projects have funding allocated up to 2026. I am mindful of the ESRI’s guidelines in terms of prioritisation and the potential for the government through fiscal policy to steer construction activity towards those sectors where demand is greatest.”
Since the renaming of the department as the Department of Public Expenditure, NDP Delivery and Reform (DPENDR), there has been an enhanced focus and mandate for the delivery of the National Development Plan (NDP). In light of this new role, a review of the support structures and levers available across Government to maximise delivery of projects was undertaken in early 2023.
In March 2023, Minister Donohoe secured government approval for six priority actions to enhance NDP delivery. The ESRI report is one of these priority actions. The report comprises an independent evaluation of investment priorities and capacity of the NDP. The evaluation has focused on the capacity to deliver current government priorities, to utilise sectoral capital allocations and to estimate the impact of the NDP on key economic indicators.
As set out in the Summer Economic Statement (SES) in 2023, an additional €2.25 billion in capital expenditure will be provided in the 2024 to 2026 period. In line with the NDP, an additional €900 million for vital projects has been made available in Budget 2024, bringing total capital expenditure in 2024 to just over €12.8 billion. This investment will continue to provide the additional schools, hospitals and transport projects that are making a real difference to people’s lives.
In late December 2023, Minister Donohoe informed the government of his approach to the updating of NDP sectoral ceilings to 2026. Departments will commence engagement with their delivery agencies, offices and/or capital units around projects and programmes that can be put forward for delivery in 2025 and 2026.